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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
 (Mark One)
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended June 30, 2005
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the transition period from ......... to ..........
 Commission File Number 1-7584
 TRANSCONTINENTAL GAS PIPE LINE CORPORATION
 (Exact name of registrant as specified in its charter)
 Delaware
(State or other jurisdiction of
incorporation or organization)
    
    74-1079400
(I.R.S. Employer
Identification No.)
 2800 Post Oak Boulevard
P. O. Box 1396
Houston, Texas
(Address of principal executive offices)
    
    77251
(Zip Code)
 Registrants telephone number, including area code (713) 215-2000
 None
 (Former name, former address and former fiscal year, if changed since last report)
 Indicate by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days.
Yes þ No o
 Indicate by check mark whether the registrant is an accelerated filer (as defined in Exchange
Act Rule 12b-2). Yes o No þ
 The number of shares of Common Stock, par value $1.00 per share, outstanding as of July 31,
2005 was 100.
 REGISTRANT MEETS THE CONDITIONS SET FORTH IN GENERAL INSTRUCTIONS H (1)(a) AND (b) OF FORM
10-Q AND IS THEREFORE FILING THIS FORM 10-Q WITH THE REDUCED DISCLOSURE FORMAT.




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1




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PagePART I. FINANCIAL INFORMATION:Item 1. Financial Statements -Condensed Consolidated Statement of Income for the three and six months
ended June 30, 2005 and 2004
    
    
    3Condensed Consolidated Balance Sheet as of June 30, 2005 and
December 31, 2004
    
    
    4Condensed Consolidated Statement of Cash Flows for the six
months ended June 30, 2005 and 2004
    
    
    6Notes to Condensed Consolidated Financial Statements
    
    
    7Item 2. Managements Narrative Analysis of the Results of Operations
    
    
    25Item 4. Controls and Procedures
    
    
    29PART II. OTHER INFORMATION
    
    
    30Item 1. Legal Proceedings
    
    
    30Item 6. Exhibits
    
    
    30Certification of Principal Executive OfficerCertification of Principal Financial OfficerCertification Pursuant to 18 U.S.C. Section 1350
    2




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PART 1  FINANCIAL INFORMATION
 
 ITEM 1. Financial Statements.
  
 
 Three Months Ended
    
    Six Months EndedJune 30,
    
    June 30,2005
    
    2004
    
    2005
    
    2004(Restated)
    
    
    
    
    
    (Restated)Operating Revenues:Natural gas sales
    
    $
    40,658
    
    
    $
    94,771
    
    
    $
    161,164
    
    
    $
    219,145Natural gas transportation
    
    
    188,741
    
    
    
    192,428
    
    
    
    383,999
    
    
    
    399,354Natural gas storage
    
    
    30,261
    
    
    
    30,289
    
    
    
    61,135
    
    
    
    61,849Other
    
    
    4,142
    
    
    
    3,070
    
    
    
    6,449
    
    
    
    5,548Total operating revenues
    
    
    263,802
    
    
    
    320,558
    
    
    
    612,747
    
    
    
    685,896Operating Costs and Expenses:Cost of natural gas sales
    
    
    40,612
    
    
    
    95,271
    
    
    
    161,118
    
    
    
    217,596Cost of natural gas transportation
    
    
    2,970
    
    
    
    5,109
    
    
    
    4,991
    
    
    
    12,712Operation and maintenance
    
    
    48,655
    
    
    
    44,758
    
    
    
    96,012
    
    
    
    94,155Administrative and general
    
    
    22,251
    
    
    
    28,257
    
    
    
    48,159
    
    
    
    58,875Depreciation and amortization
    
    
    49,086
    
    
    
    49,152
    
    
    
    98,007
    
    
    
    100,645Taxes  other than income taxes
    
    
    11,333
    
    
    
    12,024
    
    

    
    23,580
    
    
    
    23,767Other, net
    
    
    403
    
    
    
    182
    
    
    
    624
    
    
    
    169Total operating costs and expenses
    
    
    175,310
    
    
    
    234,753
    
    
    
    432,491
    
    
    
    507,919Operating Income
    
    
    88,492
    
    
    
    85,805
    
    
    
    180,256
    
    
    
    177,977Other (Income) and Other Deductions:Interest expense
    
    
    19,672
    
    
    
    22,164
    
    
    
    39,792
    
    
    
    44,330Interest income  affiliates
    
    
    (2,494
    )
    
    
    (3,069
    )
    
    
    (5,156
    )
    
    
    (4,440
    )Allowance for equity and borrowed funds used during
construction (AFUDC)
    
    
    (2,244
    )
    
    
    (1,827
    )
    
    
    (3,935
    )
    
    
    (3,345
    )Equity in earnings of unconsolidated affiliates
    
    
    (1,803
    )
    
    
    (1,843
    )
    
    
    (3,450
    )
    
    
    (3,519
    )Miscellaneous other (income) deductions, net
    
    
    (1,853
    )
    
    
    (1,029
    )
    
    
    (2,671
    )
    
    
    (1,774
    )Total other (income) and other deductions
    
    
    11,278
    
    
    
    14,396
    
    
    
    24,580
    
    
    
    31,252Income before Income Taxes
    
    
    77,214
    
    
    
    71,409
    
    
    
    155,676
    
    
    
    146,725Provision for Income Taxes
    
    
    29,152
    
    
    
    27,256
    
    
    
    58,694
    
    
    
    56,150Net Income
    
    $
    48,062
    
    
    $
    44,153
    
    
    $
    96,982
    
    
    $
    90,575
  3




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June 30,
    
    December 31,2005
    
    2004(Restated)ASSETSCurrent Assets:Cash
    
    $
    233
    
    
    $
    176Receivables:Affiliates
    
    
    4,532
    
    
    
    1,947Advances to affiliates
    
    
    139,752
    
    
    
    302,765Others, less allowance of $854 ($778 in 2004)
    
    
    81,395
    
    
    
    113,333Transportation and exchange gas receivables
    
    
    10,475
    
    
    
    5,810Inventories
    
    
    95,228
    
    
    
    105,379Deferred income taxes
    
    
    16,994
    
    
    
    17,592Other
    
    
    18,519
    
    
    
    13,543Total current assets
    
    
    367,128
    
    
    
    560,545Investments, at cost plus equity in undistributed earnings
    
    
    43,233
    
    
    
    43,592Property, Plant and Equipment:Natural gas transmission plant
    
    
    5,940,483
    
    
    
    5,866,977Less-Accumulated depreciation and amortization
    
    
    1,674,787
    
    
    
    1,594,231Total property, plant and equipment, net
    
    
    4,265,696
    
    
    
    4,272,746Other Assets
    
    
    250,516
    
    
    
    249,291Total assets
    
    $
    4,926,573
    
    
    $
    5,126,174
 4
    Table of Contents    
 June 30,
    
    December 31,2005
    
    2004(Restated)LIABILITIES AND STOCKHOLDERS EQUITYCurrent Liabilities:Payables:Affiliates
    
    $
    37,739
    
    
    $
    43,063Other
    
    
    53,042
    
    
    
    63,203Transportation and exchange gas payables
    
    
    18,221
    
    
    
    21,559Accrued liabilities
    
    
    125,331
    
    
    
    155,024Reserve for rate refunds
    
    
    5,346
    
    
    
    8,919Current maturities of long-term debt
    
    
    
    
    
    
    199,991Total current liabilities
    
    
    239,679
    
    
    
    491,759Long-Term Debt
    
    
    1,000,232
    
    
    
    999,858Other Long-Term Liabilities:Deferred income taxes
    
    
    969,248
    
    
    
    965,107Other
    
    
    150,527
    
    
    
    154,714Total other long-term liabilities
    
    
    1,119,775
    
    
    
    1,119,821Contingent liabilities and commitments (Note 3)Common Stockholders Equity:Common stock $1.00 par value:
100 shares authorized, issued and outstanding
    
    
    
    
    
    
    Premium on capital stock and other paid-in capital
    
    
    1,652,430
    
    
    
    1,652,430Retained earnings
    
    
    915,208
    
    
    
    863,226Accumulated other comprehensive loss
    
    
    (751
    )
    
    
    (920
    )Total common stockholders equity
    
    
    2,566,887
    
    
    
    2,514,736Total liabilities and stockholders equity
    
    $
    4,926,573
    
    
    $
    5,126,174
  5




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Six Months EndedJune 30,2005
    
    2004(Restated)Cash flows from operating activities:Net income
    
    $
    96,982
    
    
    $
    90,575Adjustments to reconcile net income to net cash provided
by (used in) operating activities:Depreciation and amortization
    
    
    97,942
    
    
    
    101,584Deferred income taxes
    
    
    4,634
    
    
    
    24,637Allowance for equity funds used during construction (Equity AFUDC)
    
    
    (2,638
    )
    
    
    (2,375
    )Changes in operating assets and liabilities:Receivables
    
    
    29,353
    
    
    
    38,132Transportation and exchange gas receivables
    
    
    (4,665
    )
    
    
    7,723Inventories
    
    
    10,151
    
    
    
    2,490Payables
    
    
    (3,582
    )
    
    
    (34,419
    )Transportation and exchange gas payables
    
    
    (3,338
    )
    
    
    (2,850
    )Accrued liabilities
    
    
    (29,693
    )
    
    
    (1,117
    )Reserve for rate refunds
    
    
    (3,573
    )
    
    
    (3,736
    )Other, net
    
    
    (9,741
    )
    
    
    4,840Net cash provided by operating activities
    
    
    181,832
    
    
    
    225,484Cash flows from financing activities:Retirement of long-term debt
    
    
    (200,000
    )
    
    
    Debt issue costs
    
    
    (255
    )
    
    
    Change in cash overdrafts
    
    
    (6,507
    )
    
    
    (15,108
    )Common stock dividends paid
    
    
    (45,000
    )
    
    
    (50,000
    )Net cash used in financing activities
    
    
    (251,762
    )
    
    
    (65,108
    )Cash flows from investing activities:Property, plant and equipment:Additions, net of equity AFUDC
    
    
    (92,549
    )
    
    
    (60,710
    )Changes in accounts payable
    
    
    (5,396
    )
    
    
    (8,441
    )Advances to affiliates, net
    
    
    163,013
    
    
    
    (89,478
    )Other, net
    
    
    4,919
    
    
    
    (1,824
    )Net cash provided by (used in) investing activities
    
    
    69,987
    
    
    
    (160,453
    )Net increase (decrease) in cash
    
    
    57
    
    
    
    (77
    )Cash at beginning of period
    
    
    176
    
    
    
    300Cash at end of period
    
    $
    233
    
    
    $
    223
  6




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TRANSCONTINENTAL GAS PIPE LINE CORPORATION
 
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 1. BASIS OF PRESENTATION
        7




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Three Months
    
    Six MonthsEnded June 30,
    
    Ended June 30,2005
    
    2004
    
    2005
    
    2004(Restated)
    
    
    
    (Restated)Net income
    
    $
    48,062
    
    
    $
    44,153
    
    
    $
    96,982
    
    
    $
    90,575Equity interest in unrealized
gain/(loss) on interest rate hedge
    
    
    (166
    )
    
    
    551
    
    
    
    169
    
    
    
    356Total comprehensive income
    
    $
    47,896
    
    
    $
    44,704
    
    
    $
    97,151
    
    
    $
    90,931
 Recent Accounting Developments
    8




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FERC Accounting Guidance
 9




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2. RESTATEMENT
       10




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11




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Three Months Ended June 30, 2004(As Reported)
    
    Adjustment
    
    (As Restated)Operating Revenues:Natural gas sales
    
    $
    95,271
    
    
    $
    (500
    )
    
    $
    94,771Natural gas transportation
    
    
    192,428
    
    
    
    
    
    
    
    192,428Natural gas storage
    
    
    30,289
    
    
    
    
    
    
    
    30,289Other
    
    
    3,070
    
    
    
    
    
    
    
    3,070Total operating revenues
    
    
    321,058
    
    
    
    (500
    )
    
    
    320,558Operating Costs and Expenses:Cost of natural gas sales
    
    
    95,271
    
    
    
    
    
    
    
    95,271Cost of natural gas transportation
    
    
    2,669
    
    
    
    2,440
    
    
    
    5,109Operation and maintenance
    
    
    46,058
    
    
    
    (1,300
    )
    
    
    44,758Administrative and general
    
    
    31,218
    
    
    
    (2,961
    )
    
    
    28,257Depreciation and amortization
    
    
    49,152
    
    
    
    
    
    
    
    49,152Taxes  other than income taxes
    
    
    12,024
    
    
    
    
    
    
    
    12,024Other (income) expense, net
    
    
    182
    
    
    
    
    
    
    
    182Total operating costs and expenses
    
    
    236,574
    
    
    
    (1,821
    )
    
    
    234,753Operating Income
    
    
    84,484
    
    
    
    1,321
    
    
    
    85,805Other (Income) and Other Deductions:Interest expense
    
    
    22,164
    
    
    
    
    
    
    
    22,164Interest income  affiliates
    
    
    (3,069
    )
    
    
    
    
    
    
    (3,069
    )Allowance for equity and borrowed funds used during construction (AFUDC)
    
    
    (1,827
    )
    
    
    
    
    
    
    (1,827
    )Equity in earnings of unconsolidated affiliates
    
    
    (1,843
    )
    
    
    
    
    
    
    (1,843
    )Miscellaneous other (income) deductions, net
    
    
    (1,029
    )
    
    
    
    
    
    
    (1,029
    )Total other (income) and other deductions
    
    
    14,396
    
    
    
    
    
    
    
    14,396Income before Income Taxes
    
    
    70,088
    
    
    
    1,321
    
    
    
    71,409Provision for Income Taxes
    
    
    26,756
    
    
    
    500
    
    
    
    27,256Net Income
    
    $
    43,332
    
    
    $
    821
    
    
    $
    44,153
  12




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Six Months Ended June 30, 2004(As Reported)
    
    Adjustment
    
    (As Restated)Operating Revenues:Natural gas sales
    
    $
    219,145
    
    
    $
    
    
    
    $
    219,145Natural gas transportation
    
    
    399,354
    
    
    
    
    
    
    
    399,354Natural gas storage
    
    
    61,849
    
    
    
    
    
    
    
    61,849Other
    
    
    5,548
    
    
    
    
    
    
    
    5,548Total operating revenues
    
    
    685,896
    
    
    
    
    
    
    
    685,896Operating Costs and Expenses:Cost of natural gas sales
    
    
    217,596
    
    
    
    
    
    
    
    217,596Cost of natural gas transportation
    
    
    13,909
    
    
    
    (1,197
    )
    
    
    12,712Operation and maintenance
    
    
    95,455
    
    
    
    (1,300
    )
    
    
    94,155Administrative and general
    
    
    62,444
    
    
    
    (3,569
    )
    
    
    58,875Depreciation and amortization
    
    
    96,621
    
    
    
    4,024
    
    
    
    100,645Taxes  other than income taxes
    
    
    24,773
    
    
    
    (1,006
    )
    
    
    23,767Other (income) expense, net
    
    
    169
    
    
    
    
    
    
    
    169Total operating costs and expenses
    
    
    510,967
    
    
    
    (3,048
    )
    
    
    507,919Operating Income
    
    
    174,929
    
    
    
    3,048
    
    
    
    177,977Other (Income) and Other Deductions:Interest expense
    
    
    44,330
    
    
    
    
    
    
    
    44,330Interest income  affiliates
    
    
    (4,440
    )
    
    
    
    
    
    
    (4,440
    )Allowance for equity and borrowed funds used during construction (AFUDC)
    
    
    (3,345
    )
    
    
    
    
    
    
    (3,345
    )Equity in earnings of unconsolidated affiliates
    
    
    (3,519
    )
    
    
    
    
    
    
    (3,519
    )Miscellaneous other (income) deductions, net
    
    
    (1,774
    )
    
    
    
    
    
    
    (1,774
    )Total other (income) and other deductions
    
    
    31,252
    
    
    
    
    
    
    
    31,252Income before Income Taxes
    
    
    143,677
    
    
    
    3,048
    
    
    
    146,725Provision for Income Taxes
    
    
    54,997
    
    
    
    1,153
    
    
    
    56,150Net Income
    
    $
    88,680
    
    
    $
    1,895
    
    
    $
    90,575
  13




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As of December 31, 2004(As Reported)
    
    Adjustments
    
    (As Restated)ASSETSCurrent Assets:Cash
    
    $
    176
    
    
    $
    
    
    
    $
    176Receivables:Affiliates
    
    
    1,947
    
    
    
    
    
    
    
    1,947Advances to affiliates
    
    
    302,765
    
    
    
    
    
    
    
    302,765Others, less allowance of $1,724 as reported, $778 as restated
    
    
    112,387
    
    
    
    946
    
    
    
    113,333Transportation and exchange gas receivables
    
    
    5,810
    
    
    
    
    
    
    
    5,810Inventories
    
    
    105,379
    
    
    
    
    
    
    
    105,379Deferred income taxes
    
    
    20,494
    
    
    
    (2,902
    )
    
    
    17,592Other
    
    
    13,543
    
    
    
    
    
    
    
    13,543Total current assets
    
    
    562,501
    
    
    
    (1,956
    )
    
    
    560,545Investments, at cost plus equity in undistributed earnings
    
    
    43,592
    
    
    
    
    
    
    
    43,592Property, Plant and Equipment:Natural gas transmission plant
    
    
    5,879,814
    
    
    
    (12,837
    )
    
    
    5,866,977Less-Accumulated depreciation and amortization
    
    
    1,594,177
    
    
    
    54
    
    
    
    1,594,231Total property, plant and equipment, net
    
    
    4,285,637
    
    
    
    (12,891
    )
    
    
    4,272,746Other Assets
    
    
    232,147
    
    
    
    17,144
    
    
    
    249,291Total Assets
    
    $
    5,123,877
    
    
    $
    2,297
    
    
    $
    5,126,174
  14




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As of December 31, 2004(As Reported)
    
    Adjustments
    
    (As Restated)LIABILITIES AND STOCKHOLDERS EQUITYCurrent Liabilities:Payables:Affiliates
    
    $
    43,063
    
    
    $
    
    
    
    $
    43,063Other
    
    
    66,195
    
    
    
    (2,992
    )
    
    
    63,203Transportation and exchange gas payables
    
    
    23,131
    
    
    
    (1,572
    )
    
    
    21,559Accrued liabilities
    
    
    164,528
    
    
    
    (9,504
    )
    
    
    155,024Reserve for rate refunds
    
    
    8,919
    
    
    
    
    
    
    
    8,919Current maturities of long-term debt
    
    
    199,991
    
    
    
    
    
    
    
    199,991Total current liabilities
    
    
    505,827
    
    
    
    (14,068
    )
    
    
    491,759Long-Term Debt
    
    
    999,858
    
    
    
    
    
    
    
    999,858Other Long-Term Liabilities:Deferred income taxes
    
    
    962,987
    
    
    
    2,120
    
    
    
    965,107Other
    
    
    154,714
    
    
    
    
    
    
    
    154,714Total other long-term liabilities
    
    
    1,117,701
    
    
    
    2,120
    
    
    
    1,119,821Contingent liabilities and commitments (Note 3)Common Stockholders Equity:Common Stock
$1.00 par value: 100 shares authorized, issued and outstanding
    
    
    
    
    
    
    
    
    
    
    Premium on capital stock and other paid-in capital
    
    
    1,652,430
    
    
    
    
    
    
    
    1,652,430Retained earnings
    
    
    848,981
    
    
    
    14,245
    
    
    
    863,226Accumulated other comprehensive loss
    
    
    (920
    )
    
    
    
    
    
    
    (920
    )Total common stockholders equity
    
    
    2,500,491
    
    
    
    14,245
    
    
    
    2,514,736Total liabilities and stockholders equity
    
    $
    5,123,877
    
    
    $
    2,297
    
    
    $
    5,126,174
  15




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Six Months Ended June 30, 2004(As Reported)
    
    Adjustment
    
    (As Restated)Cash flows from operating activities:Net income
    
    $
    88,680
    
    
    $
    1,895
    
    
    $
    90,575Adjustments to reconcile net income to net cash provided
by (used in) operating activities:Depreciation and amortization
    
    
    97,550
    
    
    
    4,034
    
    
    
    101,584Deferred income taxes
    
    
    23,484
    
    
    
    1,153
    
    
    
    24,637Allowance for equity funds used during construction
(Equity AFUDC)
    
    
    (2,375
    )
    
    
    
    
    
    
    (2,375
    )Changes in operating assets and liabilities:Receivables
    
    
    38,132
    
    
    
    
    
    
    
    38,132Transportation and exchange gas receivables
    
    
    7,723
    
    
    
    
    
    
    
    7,723Inventories
    
    
    2,490
    
    
    
    
    
    
    
    2,490Payables
    
    
    (34,962
    )
    
    
    543
    
    
    
    (34,419
    )Transportation and exchange gas payables
    
    
    (7,215
    )
    
    
    4,365
    
    
    
    (2,850
    )Accrued liabilities
    
    
    (111
    )
    
    
    (1,006
    )
    
    
    (1,117
    )Reserve for rate refunds
    
    
    (3,736
    )
    
    
    
    
    
    
    (3,736
    )Other, net
    
    
    14,961
    
    
    
    (10,121
    )
    
    
    4,840Net cash provided by operating activities
    
    
    224,621
    
    
    
    863
    
    
    
    225,484Cash flows from financing activities:Retirement of long-term debt
    
    
    
    
    
    
    
    
    
    
    Debt issue costs
    
    
    (15,108
    )
    
    
    
    
    
    
    (15,108
    )Change in cash overdrafts
    
    
    (50,000
    )
    
    
    
    
    
    
    (50,000
    )Common stock dividends paid
    
    
    
    
    
    
    
    
    
    
    Net cash used in financing activities
    
    
    (65,108
    )
    
    
    
    
    
    
    (65,108
    )Cash flows from investing activities:Property, plant and equipment:Additions, net of equity AFUDC
    
    
    (59,847
    )
    
    
    (863
    )
    
    
    (60,710
    )Changes in accounts payable
    
    
    (8,441
    )
    
    
    
    
    
    
    (8,441
    )Advances to affiliates, net
    
    
    (89,478
    )
    
    
    
    
    
    
    (89,478
    )Other, net
    
    
    (1,824
    )
    
    
    
    
    
    
    (1,824
    )Net cash used in investing activities
    
    
    (159,590
    )
    
    
    (863
    )
    
    
    (160,453
    )Net decrease in cash
    
    
    (77
    )
    
    
    
    
    
    
    (77
    )Cash at beginning of period
    
    
    300
    
    
    
    
    
    
    
    300Cash at end of period
    
    $
    223
    
    
    $
    
    
    
    $
    223
  16




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##### Table of Contents



3. CONTINGENT LIABILITIES AND COMMITMENTS
 Rate and Regulatory Matters
 General rate case (Docket No. RP01-245)
     17




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##### Table of Contents



Gathering facilities spin-down order (Docket Nos. CP96-206-000 and CP96-207-000)
  North Padre Island/Central Texas Systems Spin-down Proceeding (Docket Nos. CP01-32 and
CP01-34)
 18




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North High Island/West Cameron Systems and Central Louisiana System Spin-down Proceedings
  19




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##### Table of Contents



South Texas Pipeline Facilities Abandonment Proceeding
 1999 Fuel Tracker (Docket No. TM99-6-29)
  20




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##### Table of Contents



Other
 Legal Proceedings.
 Royalty claims and litigation
 th
  21




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Environmental Matters
     22




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##### Table of Contents



Safety Matters
 Pipeline Integrity Regulations
 Summary
  23




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##### Table of Contents



Other Commitments
 Commitments for construction
 4. DEBT AND FINANCING ARRANGEMENTS
 Revolving Credit and Letter of Credit Facilities
  
    
    added Williams Partners L.P. as a borrower for up to $75 million;
    
    provided Williams guarantee for the obligations of Williams Partners L.P.;
    
    released certain Williams midstream assets held as collateral and replaced them
with our common stock; and
    
    reduced commitment fees and margins.
 Retirements
  5. STOCK-BASED COMPENSATION
  24




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##### Table of Contents



Three Months
    
    Six MonthsEnded June 30,
    
    Ended June 30,2005
    
    2004
    
    2005
    
    2004(Restated)
    
    
    
    (Restated)Net income
    
    $
    48,062
    
    
    $
    44,153
    
    
    $
    96,982
    
    
    $
    90,575Add: Stock-based employee
compensation included in the
Condensed Consolidated Statement
of Income, net of related tax
effects
    
    
    449
    
    
    
    112
    
    
    
    546
    
    
    
    184Deduct: Stock-based employee
compensation expense determined
under fair value based method for
all awards, net of related tax
effects
    
    
    (686
    )
    
    
    (700
    )
    
    
    (1,086
    )
    
    
    (1,350
    )Pro forma net income
    
    $
    47,825
    
    
    $
    43,565
    
    
    $
    96,442
    
    
    $
    89,409
  
 ITEM 2. Managements Narrative Analysis of the Results of Operations.
 General
  Restatement of Financial Results
     25




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##### Table of Contents



RESULTS OF OPERATIONS
 Operating Income and Net Income
  Transportation Revenues
   Six MonthsEnded June 30,2005
    
    2004Transco System Deliveries (TBtu)Market-area deliveries:Long-haul transportation
    
    
    399.3
    
    
    
    402.9Market-area transportation
    
    
    424.7
    
    
    
    433.6Total market-area deliveries
    
    
    824.0
    
    
    
    836.5Production-area transportation
    
    
    141.6
    
    
    
    160.4Total system deliveries
    
    
    965.6
    
    
    
    996.9Average Daily Transportation Volumes (Tbtu)
    
    
    5.3
    
    
    
    5.5Average Daily Firm Reserved Capacity (Tbtu)
    
    
    6.7
    
    
    
    6.7
  26




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##### Table of Contents



Sales Revenues
     Six MonthsEnded June 30,2005
    
    2004Gas Sales Volumes (Tbtu)Long-term sales
    
    
    7.8
    
    
    
    18.6Short-term sales
    
    
    5.2
    
    
    
    6.3Total gas sales
    
    
    13.0
    
    
    
    24.9
 Storage Revenues
  Other Revenues
  27




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##### Table of Contents



Operating Costs and Expenses
  Other Income and Other Deductions
  Capital Expenditures
   Central New Jersey Expansion Project
 Leidy to Long Island Expansion Project
 28




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ITEM 4. Controls and Procedures.
      29




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The following instruments are included as exhibits to this report.
Those exhibits below incorporated by reference herein are indicated as such by
the information supplied in the parenthetical thereafter. If no parenthetical
appears after an exhibit, copies of the instrument have been included herewith.
 (10)
    
    Material contracts
 - 1
    
    Amended and Restated Credit Agreement dated as of
May 20, 2005 among The Williams Companies, Inc., Williams Partner L.P.,
Northwest Pipeline Corporation, Transcontinental Gas Pipe Line
Corporation, and the Banks, Citibank, N.A. and Bank of America, N.A.
(each, an Issuing Bank), and Citicorp USA, INC. as administrative agent.
(filed as Exhibit 1.1 to the Transcontinental Gas Pipe Line Corporation
Form 8-K filed on May 26, 2005).
 (31)
    
    Section 302 Certifications
 - 1
    
    Certification of Principal Executive Officer pursuant to
Rules 13a-14(a) and 15d-14(a) promulgated under the
Securities Exchange Act of 1934, as amended, and Item
601(b)(31) of Regulation S-K, as adopted pursuant to Section
302 of the Sarbanes-Oxley Act of 2002.- 2
    
    Certification of Principal Financial Officer pursuant to
Rules 13a-14(a) and 15d-14(a) promulgated under the
Securities Exchange Act of 1934, as amended, and Item
601(b)(31) of Regulation S-K, as adopted pursuant to Section
302 of the Sarbanes-Oxley Act of 2002.
 (32)
    
    Section 906 Certification
 -
    
    Certification of Principal Executive Officer and
Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 30




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TRANSCONTINENTAL GAS PIPE LINE
CORPORATION (Registrant)Dated: August 15, 2005
    By /s/ Jeffrey P. HeinrichsJeffrey P. HeinrichsController
(Principal Accounting Officer) 31